Businessman holds a red down arrow. The concept of reducing profits and income. Recession and the financial crisis. Capital outflow. Forecast. Credit After Hurricane Andrew upended the property insurance market, insurers realized that worst-case loss scenarios needed to be accounted for in their rates, reinsurance, capital and surplus. Financial stability ratings like those provided by Demotech became more vital tools for regulators, producers and policyholders to assess the financial condition of an insurer. (Credit: Andrii Yalanskyi/Adobe Stock)

Rating agencies play an important role in insurance policy placement and regulation. The best-known insurance rating agencies are AM Best, Moody, Fitch and Standard & Poors. However, the rating agency that is drawing the most attention these days in the property insurance market, especially in the state of Florida, is Demotech.

Demotech, based in Ohio, was formed in 1989 to provide financial stability ratings to the property & casualty insurance industry. After Hurricane Andrew upended the property insurance market, insurers realized that worst-case loss scenarios needed to be accounted for in their rates, reinsurance, capital and surplus. Financial stability ratings like those provided by Demotech became more vital tools for regulators, producers and policyholders to assess the financial condition of an insurer.

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